Correlation Between CVR Partners and Western Copper

Can any of the company-specific risk be diversified away by investing in both CVR Partners and Western Copper at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CVR Partners and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Partners LP and Western Copper and, you can compare the effects of market volatilities on CVR Partners and Western Copper and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CVR Partners with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Partners and Western Copper.

Diversification Opportunities for CVR Partners and Western Copper

-0.2

Correlation Coefficient

CVR Partners  Western Copper

Good diversification

The 3 months correlation between CVR and Western is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and CVR Partners is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CVR Partners LP are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of CVR Partners i.e., CVR Partners and Western Copper go up and down completely randomly.

Pair Corralation between CVR Partners and Western Copper

Considering the 90-day investment horizon CVR Partners is expected to generate 1.4 times less return on investment than Western Copper. But when comparing it to its historical volatility, CVR Partners LP is 1.8 times less risky than Western Copper. It trades about 0.07 of its potential returns per unit of risk. Western Copper and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Western Copper and on December 19, 2024 and sell it today you would earn a total of  7.00  from holding Western Copper and or generate 6.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CVR Partners LP  vs.  Western Copper and

CVR Partners LP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, CVR Partners may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Western Copper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Western Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CVR Partners and Western Copper

The main advantage of trading using opposite CVR Partners and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Partners position performs unexpectedly, Western Copper can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Copper will offset losses from the drop in Western Copper's long position.

The idea behind CVR Partners LP and Western Copper and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.